Rick Scott softens stance on changes to Citizens insurance

Published: Friday, November 30, 2012 at 6:30 p.m.

Last Modified: Friday, November 30, 2012 at 6:30 p.m.

ORLANDO - After once advocating the rapid dissolution of Florida’s state-run home insurance company, Gov. Rick Scott is now emphasizing less aggressive property insurance changes as his 2014 re-election bid looms and public anger grows over rate increases.

Asked repeatedly Friday if he would again push to lift the 10 percent cap on annual rate increases at state-run Citizens Property Insurance, Scott said he instead wants to work on steering people away from Citizens by highlighting the potential for “hurricane taxes” if the insurer cannot pay claims.

“The law is they can’t raise it for more than 10 percent,” Scott said after speaking to insurance industry insiders at the annual Florida Chamber of Commerce Insurance Summit. “I think what they ought to focus on is making sure people understand the risk of hurricane taxes. You might make a different decision on whether you would be willing to pay that or not.”

Scott was referring to the assessments Citizens can levy on insurance policies statewide if the company does not have enough cash to pay claims after a major disaster.

The governor and many state lawmakers argue that Citizens is significantly under-funded. But the company’s financial picture has been rapidly improving and it now has enough resources to pay claims in all but the most catastrophic storms without resorting to assessments.

One financial ratings firm puts Citizens among the strongest insurers in the nation, unlike many Florida-based private carriers.

The same so-called “hurricane taxes” are also levied on insurance policies statewide to pay claims when a private insurer fails. Weiss Ratings of Jupiter rates five of Florida’s 10 largest private insurers as “weak” or “very weak,” meaning the firm believes there is a good chance they could fail in a major hurricane.

Still, Scott and other state leaders say private market competition ultimately will solve the state’s property insurance woes. They view Citizens as unfair government intrusion into the private market.

The emphasis Friday was squarely on reforming Citizens during the final day of the Chamber’s three-day insurance summit, which focused on the politics surrounding insurance issues as state leaders prepare for the 60-day legislative session that begins in March.

Chamber leaders have worked with insurance companies, Scott’s office and key lawmakers on a series of bills in recent years designed shrink Citizens and push more people into the private market. Records obtained by the Herald-Tribune in 2011 show Scott’s office even advocated “phasing out Citizens completely.”

Increasing rates at Citizens — which now writes 23 percent of home insurance policies in Florida, including 90,000 in Sarasota and Manatee Counties — is the top goal for private insurers. But efforts to lift Citizens’ rate cap have failed in recent year amid a backlash from homeowners angry about rapidly escalating premiums.

Lawmakers also shot down a proposal last year to move Citizens customers into unregulated insurance companies, and a plan to shrink the state fund that helps keep homeowner’s rates down by providing low cost reinsurance to Florida’s property insurers.

Driving much of the debate are questions about how much homeowners can afford to pay.

Some private insurers raised rates by more than 30 percent last year and up to 18 percent in 2012. Citizens’ combined rate increase over the last three years is more than 27 percent for the average policy statewide.

Chamber political director Marian Johnson presented survey results showing property insurance costs are a big concern for state residents. But she said the public has a poor understanding of the issue and a low opinion of insurance companies.

“Insurance industry, you all know you’re the demons that everybody tries to demonize,” Johnson said.

Johnson urged industry insiders gathered for the event to make a stronger effort at educating the public on insurance issues.

Educating consumers seems to be Scott’s new insurance focus. After being asked a second time Friday if he would push to lift Citizens’ rate cap, Scott said: “I think the focus right now ought to be on educating everybody about, one: the hurricane tax risk; two: how it’s woefully inadequate as far as funding, and then, three: the fraud.”

Those points were echoed by a group of mostly industry-friendly lawmakers — many of whom serve on key insurance committees in the Legislature — who participated in a panel discussion Friday.

Rep. Jim Boyd, R-Bradenton, said raising Citizens’ rates is politically “tough” but “something we’ve got to figure out.” Sen. Garrett Richter, R-Naples, said if people cannot afford the price of property insurance they should buy a different home.

<p><em>ORLANDO</em> - After once advocating the rapid dissolution of Florida's state-run home insurance company, Gov. Rick Scott is now emphasizing less aggressive property insurance changes as his 2014 re-election bid looms and public anger grows over rate increases.</p><p>Asked repeatedly Friday if he would again push to lift the 10 percent cap on annual rate increases at state-run Citizens Property Insurance, Scott said he instead wants to work on steering people away from Citizens by highlighting the potential for “hurricane taxes” if the insurer cannot pay claims.</p><p>“The law is they can't raise it for more than 10 percent,” Scott said after speaking to insurance industry insiders at the annual Florida Chamber of Commerce Insurance Summit. “I think what they ought to focus on is making sure people understand the risk of hurricane taxes. You might make a different decision on whether you would be willing to pay that or not.”</p><p>Scott was referring to the assessments Citizens can levy on insurance policies statewide if the company does not have enough cash to pay claims after a major disaster.</p><p>The governor and many state lawmakers argue that Citizens is significantly under-funded. But the company's financial picture has been rapidly improving and it now has enough resources to pay claims in all but the most catastrophic storms without resorting to assessments.</p><p>One financial ratings firm puts Citizens among the strongest insurers in the nation, unlike many Florida-based private carriers.</p><p>The same so-called “hurricane taxes” are also levied on insurance policies statewide to pay claims when a private insurer fails. Weiss Ratings of Jupiter rates five of Florida's 10 largest private insurers as “weak” or “very weak,” meaning the firm believes there is a good chance they could fail in a major hurricane.</p><p>Still, Scott and other state leaders say private market competition ultimately will solve the state's property insurance woes. They view Citizens as unfair government intrusion into the private market.</p><p>The emphasis Friday was squarely on reforming Citizens during the final day of the Chamber's three-day insurance summit, which focused on the politics surrounding insurance issues as state leaders prepare for the 60-day legislative session that begins in March.</p><p>Chamber leaders have worked with insurance companies, Scott's office and key lawmakers on a series of bills in recent years designed shrink Citizens and push more people into the private market. Records obtained by the Herald-Tribune in 2011 show Scott's office even advocated “phasing out Citizens completely.”</p><p>Increasing rates at Citizens — which now writes 23 percent of home insurance policies in Florida, including 90,000 in Sarasota and Manatee Counties — is the top goal for private insurers. But efforts to lift Citizens' rate cap have failed in recent year amid a backlash from homeowners angry about rapidly escalating premiums.</p><p>Lawmakers also shot down a proposal last year to move Citizens customers into unregulated insurance companies, and a plan to shrink the state fund that helps keep homeowner's rates down by providing low cost reinsurance to Florida's property insurers.</p><p>Driving much of the debate are questions about how much homeowners can afford to pay.</p><p>Some private insurers raised rates by more than 30 percent last year and up to 18 percent in 2012. Citizens' combined rate increase over the last three years is more than 27 percent for the average policy statewide.</p><p>Chamber political director Marian Johnson presented survey results showing property insurance costs are a big concern for state residents. But she said the public has a poor understanding of the issue and a low opinion of insurance companies.</p><p>“Insurance industry, you all know you're the demons that everybody tries to demonize,” Johnson said.</p><p>Johnson urged industry insiders gathered for the event to make a stronger effort at educating the public on insurance issues.</p><p>Educating consumers seems to be Scott's new insurance focus. After being asked a second time Friday if he would push to lift Citizens' rate cap, Scott said: “I think the focus right now ought to be on educating everybody about, one: the hurricane tax risk; two: how it's woefully inadequate as far as funding, and then, three: the fraud.”</p><p>Those points were echoed by a group of mostly industry-friendly lawmakers — many of whom serve on key insurance committees in the Legislature — who participated in a panel discussion Friday.</p><p>Rep. Jim Boyd, R-Bradenton, said raising Citizens' rates is politically “tough” but “something we've got to figure out.” Sen. Garrett Richter, R-Naples, said if people cannot afford the price of property insurance they should buy a different home.</p><p>Rep. Kevin Rader, D-Delray Beach, complained about media coverage of property insurance issues.</p><p>“We have an enormous, enormous image problem,” said Rader, an insurance agent, adding that, “We have an issue in how we're going to combat the media and how we're going to educate legislators.”</p><p>“I think we need to hire communications experts,” said Sen. Alan Hays, R-Umatilla.</p>